Over the past month, the issue of double billing seems to be on the minds of the operations and purchasing people we are calling on at exploration and production companies. Perhaps, it’s that time of year or there’s just something in the water! When we were discussing their major pain points this past month, almost unanimously, the common refrain centered on the frustration and extra costs operators are incurring to ensure they are not being double billed by their suppliers.

The latest example occurred yesterday morning when we were visiting a small operator, which is owned and still being operated by a seasoned and grizzly veteran of 50+ years. In speaking with him, he still throws up his hands, and mixes in more than a few colorful adjectives, as to why the industry still can’t seem to wrestle this annoying and time consuming issue to the ground. Worse yet, are the widespread industry concerns this practice, being done by some less than reputable suppliers, is occurring on purpose in some cases. Now, we are not saying this is a common tactic in the industry, as that would be a far too reaching statement. But, what is common place are the continual suspicions being expressed by operators as to why suppliers of every size continue to double bill. This is easily evidenced by the extra costs and repetitive procedures operators are forced to endure in the daily reconciliation and approval of supplier invoices. These extra costs are manifested through additional staff requirements and productivity hits across the board, as no one in the company is immune to cashing down the validity of a suspect invoice.

Back to our seasoned vet who says, “We are all trying to drill and complete a well as inexpensively and as safely as possible,” He says double billing certainly does not help this cause. He knows they have paid questionable invoices in the past, not because they were legitimate, but because his company, and others, do not always have much needed information readily available at their fingertips, or the right people to talk with to properly approve these invoices. Or worse yet, they just missed the damned double bill! Regrettably, they have no choice but to reluctantly pay these invoices, and yet again, they adopt even more costly internal procedures to protect themselves from it happening again. But unfortunately, no matter what they seem to do, the double billing problem just isn’t going away!

So, who’s at fault, or where is the origin of the problem? Does this issue lie at the operator’s or the supplier’s doorstep or perhaps a little bit of both? Well from our vantage point, both sides of the industry have the fingers pointed in each other’s direction. Does the problem lie in incomplete or bad data coming in from the field, inconsistent reporting, or just plain old human error on the operator’s part? After all, our seasoned vet worries about having to deal with new field superintendents, who, just a mere two years ago, were rig hands.   What do they know and care about accounting the cost effectiveness of drilling a well? And of course, he believes suppliers need to step up and take responsibility for inefficient and incorrect billing practices on their side as well. In his words, “We have to meet somewhere in-between to better manage these expenses and to eliminate needless double billing hassles.”

So, where do we all go from here? Arguing there are valid reasons or justification for double billing is like pleading with the police officer that you have a good excuse for speeding in a school zone. If you’ve ever been caught, how did that work out   for you? Are there answers to the double billing problem? Absolutely! That is if we are willing to admit it is a problem, and we are prepared to do something about it.   So how does this affect your world? I would certainly like to hear your perspective, whether you’re sitting on the operator or supplier side of the fence. We have also set up discussions in the Special Ops – Oil and Gas Canada, and in the Oilfield HUB – Sellers Forum, on LinkedIn, if you would like to join in and share your views on the double billing dilemma.

We firmly believe double billing is preventable! As for those companies out there where it is intentional, well you likely won’t be around long term to see the elimination of double billing in the patch!

Kevin Turko, CEO Leadstone Group